Wednesday Report...Big Moves Developing in Strategic Markets...

Tonight I would like to touch on several different areas in regards to our
trades we have going right now. First lets look at the INDU and some of the
reasons I went short yesterday. The daily chart shows a rising wedge in which
the price action closed below the bottom rail yesterday. Today’s bounce was
a little stronger than what I was hoping for closing above the bottom rail
of the falling wedge. There is also another and I believe stronger chart pattern
in play and that is a possible double top. As you can see on the rising wedge,
reversal point #4 is higher than reversal point #2. When you look at the RSI,
at the top of the chart, you can see a big negative divergence. The same holds
true with the MACD at the bottom of the chart. The blue histogram is still
negative and the slo sto is falling. The 50 dma comes in just above at 17,632
so all these indicators are negative.

Next I would like to expand on the possible double top scenario and how it
may play out if indeed that is what we’re seeing. Below is the down to up volume
chart that shows you a clear picture of the possible double top with the negative
divergence on the far right hand side of the chart. There is also the black
dashed S&R line that is made from the previous tops that has been working
as support.

This next chart is a long term daily look that shows the expanding rising
wedge we’ve been following that has now had two false breakouts through the
top rail. Monday’s decline put the price action below the now dashed original
rail and I move the top rail up to connect the December 2013 high and our most
recent two highs made in November and December of this year. For the time being
I’ve labeled the pattern as a morphing expanding rising wedge until we get
more confirmation one way or the other.

If the double top plays out the price objective would be down to the 16,100
area as shown by the black arrows. That is an important number in the big scheme
of things which I will show you after this next chart.

The very long term monthly chart for the INDU shows the expanding triangle
that I call the JAWS OF LIFE. If the INDU is putting in a double top and the
price objective for that double top is around the 16,100 area then that would
be another backtest to the top rail of the expanding triangle which I have
at 16,150. So putting all the pieces of the puzzle together I can see another
small correction down to the 16,100 to 16,150 area that doesn’t hurt the major
uptrend that has been in place since 2009. This is how I’m seeing the setup
right now.

Next lets look at the weekly chart for gold that shows the price action since
the bull market high at 1923. I want to focus in on the top black rail of the
falling wedge and this weeks price action. Notice the thin brown shaded support
and resistance zone that comes in between the 1225 and 1240. As you can see
the high this week has been up to 1223 which is touching the top rail of the
black falling wedge. So gold is now trading at resistance until proven otherwise.

Lets take a quick look at the HUI that has been bouncing between the potential
top rail of a bear flag and the top rail of a triangle. What’s important about
this area is that we need to see a fourth reversal point to finish up a consolidation
pattern. As of today the solid top rail is holding resistance which is critical
to begin a move down to at least the bottom of the potential bear flag. The
fourth reversal point won’t be complete until the price action touches the
bottom rail so there is still a lot of work to do yet with the HUI. As I’ve
shown you in the past this area is critical as a halfway spot to the lower
price targets.

Previously I showed you a possible triangle that was forming in the major
downtrend channel in the HUI. I’ve now changed it to the potential red bear
flag. Notice how the price action is getting closer to the top solid rail of
the downtrend channel. It can get there from trading sideways or by moving
higher or a combination of the two. I’m still viewing this pattern as a halfway
pattern to the downside. As you can see there is still a large time component
left which needs to be fulfilled to reach the bottom price objectives.

Now lets take a look at the daily oil chart that has been doing pretty good
for us so far. Three days ago oil broke out of a small red bearish falling
wedge which is the third and possible last consolidation pattern to form in
this downtrend. A possible backtest would come in around the 51.50 area. If
this little red bearish falling wedge plays out it will give us a price objective
down to the 35 area which is the top of the old trading range.

Below is a long term daily chart that shows the massive top that oil broke
out from to get this kind of move down. Once that big S&R line broke all
the pent up energy was released and this is what we got.

Moving on to natural gas lets look at the daily chart and see what it maybe
showing us. After breaking out from the small double top, bouncing off of the
S&R line which caused a backtest to the underside of the double top hump,
natural gas finally broke out and moved lower. Natural gas has been bouncing
around for the last week and a half or so as shown by the red horizontal lines.
It maybe trying to build out a small consolidation pattern between 2.81 and
3.15.

Looking at the weekly chart we can see natural gas has broken down out of
a very large and symmetrical H&S top. It took roughly 2 1/2 years to build
out that large H&S top so this move down is just getting started on a relative
basis. Big pattern big move.

Lets look at one last chart for tonight which is a long term weekly chart
for the US dollar. As you can see the blue bullish rising wedge, that has formed
in the middle of a possible new uptrend channel, is still plugging along to
the upside. If things keep moving up for the US dollar the top rail, of the
now possible uptrend channel, would be touched around the 98 area depending
on where it gets hit and how soon. Just something to keep an eye on. All the
best...Rambus

Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus
follow the markets on a daily basis and learn a great deal of Hands on Chartology
from Rambus Tutorials and Question and Answers.

Most Members are Staunch Goldbugs who have seen Rambus in action from the
2007 to 2008 period at www.goldtent.org and now Here at Rambus Chartology
since early 2012.

To review his Work and incredible calls from the 2007-2008 period click on
the top right sidebar in the "Wizard of Rambus” ..."What If !!" Post

To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology
Form with questions and answeres and learn the Art and Science and Mindset
of a Pro Trader please Join us by subscribing monthly at www.rambus1.com

You will find Rambus to be a calm humble down home country tutor with an incredible
repitoir of all the TA based protocols tempered with his own one of a kind
style...simply put...He wants to keep his subscribers on the right side of
these crazy volatile and downright dangerous markets

Disclaimer

IMPORTANT RISK DISCLOSURE This site has been prepared solely for information
purposes, and is not an offer to buy or sell or a solicitation of an offer
to buy or sell any security or instrument or to participate in any particular
trading strategy. The information presented in this site is for general information
purposes only. Although every attempt has been made to assure accuracy, we
assume no responsibility for errors or omissions. Examples are provided for
illustrative purposes only and should not be construed as investment advice
or strategy. The information presented herein has not been designed to meet
the rigorous standards set by the Commodity Futures Trading Commission for
disclosure statements concerning the risks involved in trading futures or
options on futures. That disclosure statement must be provided to you by your
broker. The materials in this site do not attempt to describe the risks to
investors that may be associated with the way trading is conducted in any
particular options market or in any market for an underlying or related interest.
In the preparation of this site, every effort has been made to offer the most
current, correct and clearly expressed information possible. Nonetheless,
inadvertent errors can occur and applicable laws, rules, and regulations often
change. Further, the information contained herein is intended to afford general
guidelines on matters of interest, and to serve solely as an introduction
to our financial services. Accordingly, the information in this site is not
intended to serve as legal, accounting, or tax advice. Users are encouraged
to consult with professional advisors for advice concerning specific matters
before making any decision impacting on these matters. This site disclaims
any responsibility for losses incurred for market positions taken by members
or clients in their individual cases, or for any misunderstanding on the part
of any users of this website. This site shall not be liable for any indirect
incidental, special or consequential damages, and in no event will this site
be held liable for any of the products or services offered through this website.
By accessing or otherwise using this website, you are deemed to have read,
understood and accepted this disclaimer.